Can Your HSA Cover Foreign Medical Expenses?

You can use an HSA for foreign medical expenses, and the withdrawal stays tax-free as long as the care would qualify if you had received it in the United States. The IRS defines a qualified medical expense by what the service or product is, not by where you got it. A doctor visit in Tokyo, an emergency room stay in Berlin, or a dental filling in Mexico City is treated the same as one down the street. What changes abroad is the paperwork: you handle the currency conversion, you keep the receipts, and you may need to translate them.

Which Foreign Medical Expenses Qualify

The IRS applies one definition everywhere: amounts paid for the diagnosis, treatment, or prevention of disease, or for care affecting any part or function of the body.¹ That covers doctor visits, hospital stays, surgeries, dental work, vision care, mental health services, and prescription medications. If you could reimburse the expense from your HSA at home, you can reimburse it abroad.

Over-the-counter drugs and menstrual care products qualify without a prescription. The CARES Act permanently removed the prescription requirement for OTC medicines like pain relievers and cold medication, retroactive to January 1, 2020.² Ibuprofen bought at a pharmacy in Barcelona counts the same as ibuprofen bought at a drugstore in Boston.

One rule catches people off guard with foreign prescriptions. You can only use HSA funds for a drug purchased abroad if that drug is legal in both the foreign country and the United States.¹ You also cannot buy prescription drugs in another country and import them back to the U.S. for use here.

What Doesn’t Qualify Abroad

The same exclusions that apply at home apply overseas, plus a few that only matter when you cross a border.

Illegal procedures. Any operation, treatment, or controlled substance that violates federal U.S. law is excluded, even if it’s legal where you received it. Cannabis-based treatments are a common example, since cannabis remains illegal under federal law.¹
Cosmetic surgery. A procedure that doesn’t treat a medical condition or correct disfigurement from disease, injury, or a congenital abnormality isn’t a qualified expense. Flying to Seoul for an elective facelift doesn’t become HSA-eligible just because the surgery happened overseas.
General health products. Vitamins, supplements, and gym memberships don’t qualify unless a doctor has prescribed them for a specific diagnosed condition.
Insurance premiums. You generally cannot use HSA funds to pay health insurance premiums. Narrow exceptions exist for COBRA, premiums paid while receiving unemployment benefits, Medicare premiums if you’re 65 or older, and qualified long-term care insurance up to age-based limits. Foreign travel insurance, evacuation insurance, and international health plans fall outside those exceptions.³

One more boundary: you cannot reimburse a foreign medical expense from your HSA and also claim it as an itemized deduction on Schedule A. It’s one or the other.¹

Transportation and Lodging for Foreign Care

Getting to a foreign provider can itself be an HSA-eligible expense. Bus, taxi, train, and plane fares all qualify as long as the trip is primarily for medical care.¹ If you drive, you can use either actual gas and oil costs or the IRS standard medical mileage rate (21 cents per mile for 2025; a new rate applies for 2026). Parking and tolls count either way. What doesn’t count: a trip that’s primarily a vacation with a medical appointment tacked on, or travel aimed at general health improvement.

Lodging away from home for medical care can qualify up to $50 per person per night, with strict conditions. The care must be provided by a doctor at a licensed hospital or equivalent facility, the lodging must be essential to the care, and the trip cannot have a significant element of personal recreation.¹ If a companion needs to travel with the patient, their lodging qualifies too, so a parent traveling with a sick child could claim up to $100 per night in total. Meals are never included.

Paying the Foreign Provider

Most HSA debit cards work at foreign providers that accept the card’s payment network, but practical problems come up more often than you’d expect. Many foreign clinics, pharmacies, and hospitals don’t use the merchant category codes that HSA custodians look for when auto-approving transactions. When the code doesn’t match, the charge may be declined or flagged for manual review even though the expense itself is perfectly qualified.

Foreign transaction fees are another issue. HSA custodians commonly charge 1–3% for currency conversion or network markup on overseas card transactions. Those fees are not qualified medical expenses. The IRS treats them as finance charges, so you cannot reimburse them tax-free.

A simpler approach for most travelers is to pay the foreign provider with a personal credit card or cash and reimburse yourself from the HSA afterward. There is no deadline for HSA reimbursement as long as the expense was incurred after your HSA was established. You can pay abroad in June and withdraw from the HSA in December, or years later. Keep the receipt and conversion documentation either way.

Converting Foreign Currency for Your Records

Every HSA expense has to be recorded in U.S. dollars eventually. The IRS rule is to use the exchange rate in effect on the date you actually paid the foreign provider.⁴ If you paid a Thai hospital on March 15, use the March 15 rate, even if you don’t withdraw from the HSA until months later.

Use a publicly verifiable source: your bank’s posted rate for that date, the rate shown on your credit card statement, or the Treasury Department’s daily exchange rates. Save a printout or screenshot that shows the rate and the date. If the IRS questions the distribution, you need to show exactly how 4,500 baht or 200 euros became the dollar amount you claimed.

Keep the conversion as a plain calculation alongside the original receipt: amount paid in foreign currency, times the exchange rate on the payment date, equals the USD amount.

Documentation You Need to Keep

Foreign HSA claims demand more paperwork than domestic ones, and this is where most people cut corners. The IRS expects records that prove three things: what the medical expense was, how much it cost in U.S. dollars, and that it qualifies under the rules.

Get a fully itemized receipt at the time of payment. It needs to show the services provided, the date of service, the amount charged, and the patient’s name. A credit card slip or bank statement showing you paid a hospital isn’t enough, because it doesn’t describe what the payment was for.

If the receipt is in a language other than English, you need an English translation. IRS guidance directs taxpayers to provide a certified translation of foreign-language documents.⁵ “Certified” means the translator signs a statement attesting that the translation is complete and accurate. The translation cost itself is not an HSA-qualified expense.

Hold onto the original foreign receipt, the certified English translation, and the currency conversion calculation. Keep these records for at least three years from the date you file the tax return that covers the distribution.⁶

If you can’t produce the documentation during an audit, the IRS can reclassify the distribution as non-qualified. You’d then owe ordinary income tax on the amount, plus a 20% additional tax if you’re under 65, not disabled, and still living.³ On a $3,000 foreign hospital bill, the 20% penalty alone would be $600 before income tax.

If You Live Abroad: Spending vs. Contributing

Spending from an existing HSA while living overseas is one thing. Continuing to put money into the account is a separate question, and it’s where expats most often get tripped up.

HSA contribution eligibility hinges on one core requirement: you must be covered under a qualifying High Deductible Health Plan on the first day of each month you want to contribute.² You also cannot be enrolled in Medicare or covered under a non-HDHP plan that provides overlapping benefits.

A common misconception holds that claiming the Foreign Earned Income Exclusion on Form 2555 automatically disqualifies you from HSA contributions. That isn’t quite right. The statute defines eligibility based on HDHP coverage, not on whether you claim the FEIE.² The real problems are practical:

Losing HDHP coverage. Most U.S. employer-sponsored HDHPs don’t cover employees living abroad long-term. Once you drop off the plan, you lose eligibility for every month you’re uncovered.
Foreign health coverage. Enrolling in a national health system or buying a foreign policy that isn’t an HDHP counts as disqualifying “other coverage.” Many countries require residents to carry local health insurance, which ends HSA eligibility even if you’d otherwise qualify.
Reduced tax benefit. HSA contributions only produce a deduction against income that isn’t already excluded. If you exclude all your foreign earnings through the FEIE, the deduction has nothing to offset. You can still contribute and withdraw tax-free for qualified expenses, but you lose the upfront tax break.

If you lose eligibility partway through the year, you must prorate your contribution limit. Divide the annual limit by 12 and multiply by the number of months you were covered under an HDHP on the first of the month. Contributions above that prorated amount are excess contributions, subject to a 6% excise tax for every year they remain in the account.⁷ You can avoid the penalty by withdrawing the excess (plus any earnings on it) before the tax filing deadline for that year.

Eligibility restrictions affect deposits, not withdrawals. Even during months when you can’t contribute, you can still pull from existing HSA funds tax-free for qualified medical expenses, whether in the U.S. or abroad.³ An expat who hasn’t contributed in three years can still tap the account for a qualified emergency room visit overseas without owing any tax or penalty.

One change on the horizon may help some expats. Starting in 2026, under the One, Big, Beautiful Bill Act, bronze and catastrophic plans available through the marketplace are automatically treated as HSA-compatible, even if they don’t meet the traditional HDHP deductible structure. Direct primary care arrangements also no longer disqualify you from contributing.⁸ For expats who keep a U.S. marketplace plan while living overseas, that could open up contribution eligibility that wasn’t there before.

1
Internal Revenue Service. Publication 502 (2025), Medical and Dental Expenses
2
Office of the Law Revision Counsel. 26 U.S.C. 223 – Health Savings Accounts
3
Internal Revenue Service. Publication 969 (2025), Health Savings Accounts and Other Tax-Favored Health Plans
4
Internal Revenue Service. Foreign Currency and Currency Exchange Rates
5
Internal Revenue Service. International Practice Service Process Unit
6
Internal Revenue Service. How Long Should I Keep Records?
7
Office of the Law Revision Counsel. 26 U.S.C. 4973 – Tax on Excess Contributions to Certain Tax-Favored Accounts and Annuities
8
Internal Revenue Service. Treasury, IRS Provide Guidance on New Tax Benefits for Health Savings Account Participants Under the One, Big, Beautiful Bill